The mischief being perpetrated by the World Bank is much underestimated. Throughout the underdeveloped world, it promotes the desirability of introducing a system of land titles. This is perfectly reasonable when it argues that titles protect the poor against the weak and powerful and so improve their security of tenure, making them more likely to invest. But the bank is hopelessly wrong to advocate land titles as a means of gaining access to credit so that they can develop small businesses or invest in agricultural land to generate job opportunities.
What they are talking about appears to be the use of land titles as collateral for loans. In the long term this results in small scale farmers falling into the clutches of bankers and ending up by losing their property, usually when things go wrong, for example, when harvest failures occur. And land titles, in the absence of land value taxation, is the driving force behind a class system of haves and have-nots, the have-nots being those who do not have the titles to the best land.

Proper banking is not moneylending against pledges, usually real estate. That is pawnbroking. The prevalence of this practice is the main cause of the present financial crisis, and of most of the previous ones as well. Proper banking involves the creation of credit, and the appropriate question that needs to be asked is whether the borrower will pay the money back. If the risk of default is high, the money should not be loaned in the first place.

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our Privacy Policy.